Sommer v C Pty Ltd (No.4) - [2020] FCCA 2589

FEDERAL CIRCUIT COURT OF AUSTRALIA

SOMMER v C PTY LTD (No.4)

[2020] FCCA 2589

Catchwords:
BANKRUPTCY – PRACTICE AND PROCEDURE – in an interlocutory judgment it was foreshadowed that at the hearing of the application to set aside a bankruptcy notice the parties would be invited to make submissions about whether the costs determination on the basis of which the judgment referred to in the bankruptcy notice was registered was affected by jurisdictional error – without notice to the Court the creditor applied to the Manager, Costs Assessment under s.83(1) of the Legal Profession Uniform Law Application Act 2014 (NSW) for application for a review of the costs determination on the grounds that the costs assessor misunderstood the statutory tasks (Costs Review Application) – whether the continuation with the Costs Review Application interfered with or had the tendency to interfere with the proceeding before the Court – whether the continuation of the Costs Review Application is vexatious and oppressive – whether having indicated to the Court that the creditor intends to withdraw the Costs Review Application the Court ought nevertheless make an order restraining the creditor from taking any steps in the Costs Review Application – order made.

BANKRUPTCY – PRACTICE AND PROCEDURE – whether costs assessor should be joined as a party – order made requiring the applicant to file an amended application joining costs assessor as second respondent.

BANKRUPTCY – PRACTICE AND PROCEDURE – whether particular paragraphs of a document titled “Statement of Applicant’s Claim” should be struck out because they do not give fair notice of the case the applicant intends to make or because the claims intended to be conveyed by those paragraphs are bound to fail – some paragraphs ordered to be struck out.

Legislation:

Bankruptcy Act 1966 (Cth), ss.35A(2A), 41(6A)

Federal Circuit Court Act 1999 (Cth), s.8(3)
Federal Circuit Court Rules 2001 (Cth), r.11.01(1)
Federal Circuit Court (Bankruptcy) Rules 2016 (Cth), r.3.03
Judiciary Act 1903 (Cth), s.79(1)
Legal Profession Uniform Law (NSW), ss.172, 198(3), 198(4)
Legal Profession Uniform Law Application Act 2014 (NSW), ss.70, 83(1), 83(1A)
Legal Profession Uniform Law Application Regulation 2015 (NSW), regs.41(1)(a), 43
Supreme Court Act 1970 (NSW), s.69

Cases cited:

CSR Limited v Cigna Insurance Australia Limited (1997) 189 CLR 345
Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11; (2002) 209 CLR 597
Neil v Nott (1994) 68 ALJR 509
Obrart v Grego [2017] FCCA 929
Perera v GetSwift Limited [2018] FCAFC 202
Rizeq v Western Australia [2017] HCA 23
Sommer v C Pty Ltd [2020] FCCA 1412
Sommer v C Pty Ltd (No.2) [2020] FCCA 1898
Sommer v C Pty Ltd (No.3) [2020] FCCA 2156

Applicant:

MS SOMMER

Respondent:

C PTY LTD

File Number:

SYG 697 of 2020

Judgment of:

Judge Manousaridis

Hearing date:

11 September 2020

Date of Last Submission:

11 September 2020

Delivered at:

Sydney

Delivered on:

18 September 2020

REPRESENTATION

Applicant in person, by telephone

Counsel for the Respondent:

Ms M Castle, by telephone

Solicitors for the Respondent:

ICL…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] FCCA 2589
Decision Date: 18 September 2020

CaseChat Overview and Summary

This matter came before Judge Manousaridis of the Federal Circuit Court of Australia concerning an application to set aside a bankruptcy notice. The dispute arose from a costs determination which the applicant alleged was affected by jurisdictional error. The respondent, C Pty Ltd, had initiated a separate application for a review of this costs determination without notifying the Court, which the applicant argued interfered with the ongoing proceedings and was vexatious and oppressive.

The Court was required to determine whether the respondent's continuation with its application for a review of the costs determination interfered with or had the tendency to interfere with the proceedings before the Court, and whether that application was vexatious and oppressive. Additionally, the Court considered whether to make an order restraining the respondent from taking any further steps in the costs review application, despite the respondent indicating an intention to withdraw it. The Court also had to decide whether a costs assessor should be joined as a party to the proceedings and whether certain paragraphs of the applicant's "Statement of Applicant's Claim" should be struck out for failing to provide fair notice or for being bound to fail.

Judge Manousaridis reasoned that the respondent's pursuit of the costs review application, particularly after indicating an intention to withdraw it, was vexatious and oppressive and interfered with the Court's proceedings. The Court applied principles relating to the interference with judicial processes and the need for applications to be conducted in good faith and without undue delay or harassment. The Court also considered the requirements for pleadings to provide fair notice and the circumstances under which paragraphs may be struck out.

The Court ordered that specific paragraphs of the applicant's "Statement of Applicant's Claim" be struck out, with leave to reformulate them. The respondent was restrained from taking any steps in its costs review application other than those necessary to withdraw or abandon it. The applicant was ordered to file an amended application joining the costs assessor as the second respondent and seeking a declaration that the costs determinations were affected by jurisdictional error. The Court also vacated previous hearing dates and relisted the matter for hearing, while extending the time for compliance with the bankruptcy notice.

Orders

Orders of the court

Order 4 described in the Statement of Applicant’s Claim, and paragraphs 25, 26, 27, 28, and 29 of the Statement of Applicant’s Claim, are struck out.

The applicant have leave to reformulate the matters alleged in paragraphs 25, 26, 27, 28, and 29 of the Statement of Applicant’s Claim if the applicant so elects.

Until further order, the respondent is restrained from taking any step in relation to the application the respondent made on 23 July 2020 (Costs Review Application) for review of the determination of costs made by Ms M recorded in two costs certificates both issued on 18 July 2019 (Costs Certificates), other than taking such step or steps that is or are necessary to withdraw or abandon the Costs Review Application.

By 22 September 2020 the applicant file an amended application in which:

(a) Ms M, in her capacity as a costs assessor, is named as the second respondent.

(b) The following paragraph is added after paragraph 2 under the heading “Details of claim”:

3. A declaration that, on the grounds stated in the “Grounds of review” contained in the “Application for Review of Determination(s) of a Costs Assessor” the first respondent lodged on 23 July 2020 with the Manager, Costs Assessment pursuant to s.83 of the Legal Profession Uniform Law Application Act 2014 (NSW) the costs determinations recorded in the Certificates of Determination of Costs issued by the second respondent on 18 July 2020 are affected by jurisdictional error and for that reason are of no legal effect.

THE COURT NOTES THAT

On the day these orders are made the associate to Judge Manousaridis will forward to the parties by email the form of the amended application the applicant is to file pursuant to order 4.

THE COURT ORDERS THAT

By 5.00 pm on 25 September 2020 the applicant serve by email on the respondent, on Ms M, and on the Manager, Costs Assessment, a sealed copy of the amended application, and a sealed copy of these orders.

Order 4 of the orders made on 21 August 2020 is vacated.

The dates that were fixed for hearing under order 6 of the orders made on 21 August 2020 are vacated.

Subject to order 10 the matter is listed for hearing for two days on 14 and 15 October 2020.

10.

If the dates referred to in order 9 are not convenient to the applicant or to the respondent the applicant or respondent may, by 5.00 pm on 21 September 2020, inform the associate to Judge Manousaridis by email that the dates are not convenient and suggest some other days in the weeks commencing on 12 and 19 October 2020.

11.

The respondent file and serve any further affidavits on which it intends to rely by 25 September 2020.

12.

The matter is listed for directions before Judge Manousaridis at 9.30 am on 2 October 2020, such directions hearing to be conducted by telephone.

13.

Pursuant to s.41(6A) of the Bankruptcy Act 1966 (Cth) and r.3.03 of the Federal Circuit Court (Bankruptcy) Rules 2016 (Cth), on condition that Bankruptcy Notice No. …54 issued on … 2020 was served on the applicant on 28 February 2020, the time for compliance by the applicant with the requirements of the Bankruptcy Notice is extended up to and including 15 October 2020.

THE COURT NOTES THAT

14.

The following are issues in the proceeding:

(a) Whether the document titled “Further Statement of Reasons” dated 9 September 2020 prepared by Ms M in her capacity as a costs assessor constitutes a “new determination” within the meaning of reg.43 of the Legal Profession Uniform Law Application Regulation 2015 (NSW).

(b) Assuming the “Further Statement of Reasons” is a “new determination” within the meaning of reg.43 of the Legal Profession Uniform Law Application Regulation 2015 (NSW) whether it has any legal effect because it may have been issued in breach of any duty of procedural fairness the Manager, Costs Assessment, or the costs assessor, may have owed the applicant, or for any other reason having regard to the circumstances in which the “Further Statement of Reasons” was issued.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

The applicant filed a further affidavit, as she was permitted to do under the directions I made on 5 June 2020. The respondent, however, did not file any affidavits. Instead, on 18 June 2020 it purported to unilaterally withdraw the bankruptcy notice. That led to my hearing on 10 July 2020 the separate determination of the question whether it was open to the respondent to unilaterally withdraw the bankruptcy notice. On 14 July 2020 I published reasons for judgment in which I held it was not open to the respondent to unilaterally withdraw the bankruptcy notice (second judgment).[8] [8] Sommer v C Pty Ltd (No.2) [2020] FCCA 1898 The matter came before me for directions on 17 July 2020. The respondent applied for an adjournment of two weeks to give the respondent an opportunity to consider whether it should apply for leave to appeal against my determination of the question whether the respondent could unilaterally withdraw the bankruptcy notice. I adjourned the matter for further directions to 31 July 2020. The respondent decided not to apply for leave to appeal. Instead, on 23 July 2020, without notice to the Court, the respondent initiated the Costs Review Application. As I have set out in the third judgment, in the Costs Review Application the respondent asserts the costs assessor has made errors, which the respondent submitted to me constitute jurisdictional errors.[9][9] Sommer v C Pty Ltd (No.3) [2020] FCCA 2156 On 31 July 2020, at the time the matter had been listed for a directions hearing, the respondent applied for an order that the bankruptcy notice be set aside without requiring a further trial. The basis of that application was that there is an “obvious jurisdictional error in the costs assessment” and, for that reason, “the outcome of these proceedings is foregone”; and the “Court should accordingly set aside the bankruptcy notice . . . without requiring . . . a further trial”.[10] [10] Sommer v C Pty Ltd (No.3) [2020] FCCA 2156, at [1] On 7 August 2020 I published the third judgment in which I dismissed the respondent’s application that I set aside the bankruptcy notice without trial.[11] I did so for two reasons. First, although the respondent submitted the costs assessment was affected by jurisdictional error, I was not satisfied the respondent had in truth conceded that the costs determination recorded in the Costs Certificate is affected by jurisdictional error. Alternatively, I found that if the respondent has conceded that the costs determination is affected by any jurisdictional error, the respondent’s understanding of what it believes it has conceded is not jurisdictional error as understood by the law, which entails that the purported decision that is affected by jurisdictional error “is a decision that lacks legal foundation and is properly regarded, in law, as no decision at all”.[12] The second reason I dismissed the respondent’s application is I found that there was before me a “matter” which included claims that extended beyond whether the costs determination was affected by jurisdictional error.[13][11] Sommer v C Pty Ltd (No.3) [2020] FCCA 2156[12] Sommer v C Pty Ltd (No.3) [2020] FCCA 2156, at [31], quoting Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11; (2002) 209 CLR 597, at pages 614-615 ([51])[13] Sommer v C Pty Ltd (No.3) [2020] FCCA 2156, at [32]-[44]

Ratio Decidendi

Legal Principle Established

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